Watsons Anchor Hurls Abuse at Consumers

After spending three decades in the Chinese Market, Watsons needs a thorough overhaul.

In an era when social media is highly developed, every use of traffic flow means the exchange of value among brands, platforms and young people. This time, the failure to use the traffic flow properly showed Watsons mistake in their reform. 

January 14, two key entries appeared on Weibo, # Watsons criticized customers for trying to participate in Watsons one cent facial mask promotion# and # Watsons live streaming host cursed at the consumers as mad dogs#. The two entries triggered tens of millions of readings and was reported by many media companies. Obviously Watsons, , which clearly indicated in its financial statements that it was taking measures to further strengthen customer relationship management and enhance its capabilities in big data and e-commerce business, fell flat for this "irrational" live streaming session.

01

Two “Sins”

Questionable Traffic Flow Promotion Activity

Live Streaming Host Curses at Consumers

Let us take a look back at the incident. Watsons launched a facial mask promotion activity on a platform on January 11. With the coupon, consumers can purchase Merbliss wedding hydrating mask or SNP bird's nest hydrating ampoule essence mask at a price of 0.01 yuan (each person is limited to 5 boxes). After customers place the order online, they can only get the products through offline store pickup. Most offline stores said that they are out of the products.

A consumer said: “I was the first to pickup my order after the store is opened for business but I was told that they were out of the masks and not expecting replenishment. I then made 40 calls to ‘400’ and eventually got through, I had to pay for the calls that didn’t go through. Watsons said to email my order number and register my order and they would replenish the products. In the end Watsons said they would refund me. I tried to call ‘12315’ but my complaint was not accepted.”

On January 13, many consumers went to Watsons live streaming studio to express their dissatisfaction. When asking when the facial masks could be picked up, they were insulted by the live streaming host and blocked by the backstage staff.

During the live streaming the Watsons live streaming host was shouting ”biting like mad dogs for one cent”, "kicking you out makes me happy" and "you guys deserve it". Another behind-the-scenes worker raised her voice and yelled “you guys would not admit it if you got the good deal. Now you didn’t get the good deal, you come here to bite us.” 

According to Article 49 of the E-Commerce Law, if the information of goods or services released by e-commerce operators meets the offer conditions, and the user selects the goods or services and submits the order successfully, the contract shall be established.

At present, there are more than 1,000 complaints about Watsons promotion activity

on the Black Cat complaint platform. Up to now, there are still many consumers who have not picked up their orders in Watsons' stores, and then the headquarters is asking the consumers to accept refunds.

The CBO reporter learned that this promotion activity was an in store event launched by Watsons on the Meituan platform. It was not a takeout event and it did not involve any takeout riders to deliver the orders to customers. Meituan did not respond to this issue, so the details are not clear.

CBO tried to contact Watsons, but as of press time, no reply had been given.

02

Live Streaming Could Lead to Both Success and Failure

The Quality and Professional Training of Live Streaming Hosts

 Need to be Improved

Since Hongda Gao took office as CEO of Watsons China in 2017, a major focus of the reform has been to gradually realize digital transformation and upgrading.

In 2018, Watsons successively worked with Cainiao and Eleme to expand delivery services. In 2019, Watsons once again launched eight major upgraded services, including lightning delivery, store self-pickup, code-scanning purchase, and member reservation for free makeup, etc. In 2020, Watsons, not only actuated the functions of "store self-pickup" and "lightning delivery", but also accurately captured the target audience with big data and further enhanced member stickiness.

During this period, in the face of the COVID-19 pandemic and declining performance, Watsons obviously had no reason not to choose the immensely popular live streaming competition track.

In June 2020, Hongda Gao showed up in a live streaming session in person, using "president + celebrity host" to sell products. During the two hours of the live streaming session, the sales in the live streaming studio alone reached RMB650,000, attracting a total of 400,000 people to Watsons WeChat Cloud Store, among which there were over 120,000 new users. 

In the past two years, besides live streaming on platforms such as Watsons Cloud Store and its official flagship store on Tmall, Watsons had also worked with well-known leading besides live streaming such as Austin Li to promote and sell products. In its official flagship store on Tmall, the CBO reporter saw that its live streaming plan seemed unaffected by the above incident and two live streaming sessions had been reserved for January 15.

However, some consumers raised protest.

Most voices believe that live streaming is a new form of promotion and sales. While providing consumption services to businesses and sales. While

It is particularly important for companies to respect consumers and provide a civilized, equal and polite live streaming shopping environment. The recent strict investigation of several leading live streaming hosts has aroused the concern of society about rectifying the livestreaming industry. In this incident Watsons did not set a bottom line standard for their live streaming host’s conduct. The incident did not only violate consumers’ rights and interests, but also put a question mark on the civility standards in the living streaming industry.

03

Youth Oriented Watsons Facing New Issues

Selling its own brands and products, Watsons has maintained its dominant position in the field of beauty retail for many years. However, with the development of We Media, the way and characteristics of media communication have not only changed the way of beauty production and sales, but also greatly changed the market position and pattern of beauty retail.

“Asking customers to place orders online by themselves when there are no other customers to serve at the store(not busy); not supporting onsite checkout; bad attitude; forcing customers to call the headquarters to complain!” In the era of social media, Watsons has not addressed the older controversial issues of aging product design and Beauty Advisor aggressive sales. Watsons is now seeing new issues arising.

New beauty retail species such as THE COLORIST and WOW COLOUR are making their way into department stores and shopping centers. New emerging brands such as Perfect Diary and Judydoll have developed via the internet, and have further extended their tentacles to department stores and shopping centers with their unique DTC (Direct To Consumer) model. Beauty industry products update speed and sales model have been further rewritten. Watsons has more to deal with than simply improving product portfolio and adjusting shopping guide strategy.

Of course, in the fierce competition, Watsons didn't just sit still and do nothing.

According to Watsons' performance data for the first half of 2021, its global sales amounted to HK$82.621 billion (about RMB68.775 billion), up 12% year over year. Specifically, the sales in China were HK$11.599 billion (about RMB9.655 billion), up 32% year over year, which is Watsons biggest growth in the Chinese market in the past five years. 

According to Watsons, the performance recovery is due to the prevention and gradual stabilization of COVID-19, the consumers’ rising spending desires and Watsons stores transformation and upgrading. Some of Watsons stores have reduced the number of domestic brands and self-owned brands, and instead have introduced imported cosmetics and trendy products in large scale.

The financial statements also mentioned that the Group had accelerated their offline plus online platform retail strategy, providing seamless offline and online retail experience and closer customer contact to improve growth and profitability.

In February 2021 Watsons, which had already started to benefit from its traffic flow reform, officially announced KUN ( Xukun Cai)  as its brand spokesperson, increasing new traffic flow with the help of a top celebrity. In addition, cooperation with well-known network KOLs such as Austin Li, Beika Li (Becky) & etc. also showed Watsons' determination to eagerly embrace the traffic flow.

Traffic flow is not solution to everything.

Recently, Procter & Gamble and Watsons have jointly developed and launched aio, a new skin care brand. It is reported that the brand will be exclusively sold in Watsons offline stores and online channels in Greater China including China mainland, Hong Kong, and Taiwan. This is the first time that P&G has worked with a retailer to develop a skin care brand, and it is also one of the examples of Watsons' innovative "O+O" (Offline plus Online) retail model.

It can be seen that for Watsons, taking this step is to cater to the needs of the consumers who have completely adapted themselves to the attributes of the Internet. However, just like Watsons offline Beauty Advisors carried out aggressive sales and did not provide good customer service, Watsons online live streaming hosts failed to respect consumers sincerely. Eventually the damage is on Watsons reputation.